-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,then ________ limit(s)the market to 3 firms.
A) economies of scale
B) a "tit for tat" strategy
C) collusion
D) a Nash equilibrium
E) legal requirements

Question

-The figure above shows the market demand curve and the ATC curve for a firm.If all firms in the market have the same ATC curve,then ________ limit(s)the market to 3 firms.
A) economies of scale 
B) a "tit for tat" strategy 
C) collusion 
D) a Nash equilibrium 
E) legal requirements

Quizplus · Accepted Answer

Economies of scale limit the market to 3 firms because as firms increase their production, their average total costs (ATC) decrease up to a point. This means larger firms can produce at a lower cost, limiting the number of firms that can effectively compete in the market.

-The Figure Above Shows the Market Demand Curve and the ATC